NVIDIA Sees $120B-$175B Revenue Boost From Eased China Export Restrictions

NVIDIA Corporation (NVDA.US) is set to benefit from a potential easing of export restrictions on its H20 GPU chips to China, according to a recent analysis. The firm anticipates that this move could add between $120 billion and $175 billion to NVIDIA's revenue for the fiscal year 2026, with a potential increase in non-GAAP earnings per share of $0.30 to $0.45. However, analysts caution that the current situation remains uncertain, with several factors that could impact the outcome.

NVIDIA announced on July 14 that it had received preliminary approval from the U.S. government to sell its H20 GPU chips to the Chinese market. This development comes after the company had to write down $45 billion in inventory and purchase commitments in the first quarter of its 2026 fiscal year due to U.S. export restrictions on semiconductors to China. The company also projected a $25 billion reduction in revenue as a result of these restrictions.

Analysts estimate that if the ban is fully lifted, NVIDIA could resell approximately $22.5 billion worth of previously written-down inventory, with a margin close to 100%. The optimistic scenario suggests that this reversal could significantly boost NVIDIA's revenue for the fiscal year 2026. However, there are several uncertainties that need to be considered.

Firstly, NVIDIA is still in discussions with the U.S. government regarding the list of potential Chinese customers. Secondly, the demand for H20 GPUs from Chinese customers is not yet fully clear, as they are currently evaluating domestic alternatives. Additionally, the technical framework for future exports to China has not been finalized. Furthermore, recent gains in NVIDIA's stock price have already partially reflected these expectations.

Looking ahead, the firm maintains a positive outlook on NVIDIA, reiterating its "buy" rating. The firm believes that, aside from the Chinese market, there are several other areas where NVIDIA has the potential to exceed market expectations before 2026. Despite the potential benefits, the firm advises caution and close monitoring of the situation as it develops.